This post will be the first in over a dozen that I plan to write before mid-summer covering services procurement vendors. ProcureStaff, who has been patiently waiting for a write-up for a number of months while I got my contingent derriere in full research gear, is a services procurement -- specifically contingent labor -- provider offering both a VMS (vendor management systems) platform and MSP (managed services provider) services to help companies better manage their contingent workforce. In this first post, I'm going to do something that I've not done before, and rather than talk about the company or solution first, I'll jump straight to what I learned talking to their references. So consider this post straight from the customer's mouth, so to speak. In posts 2 and 3 (coming out next week) on ProcureStaff, I'll talk more about the company (and its roots as part of Volt) and solutions.
The main reference I spoke to when doing diligence on ProcureStaff was the CPO for a major financial services company -- someone who is well known by many in the procurement world. At the time, before interviewing a number of other services procurement users and talking to other vendors, I found it interesting that such a ranking procurement leader would take an interest in what I thought was a niche area. But his reasons were quite clear -- services spend represents a serious portion of his overall spending portfolio and the rest of the business was not actively managing it for cost, quality risk and performance. And he needed to do something about it. Even though "HR has a big stake in contingent labor" in this organization, procurement, in part thanks to ProcureStaff, now owns the process and "works very collaboratively with HR in terms of structuring protocols, governance, etc." Interestingly, this CPO chose ProcureStaff to complement existing Spend Management infrastructure investments including Ariba. They are one company that truly embraces the best of breed mindset. Their main procure-to-pay platform is Ariba while using Frictionless/SAP for a number of other Spend Management areas.
He suggested that "in a managed services program, technology is the key. You want to be able to aggregate the total need. You also want the ability to set controls and parameters when you look at long-term retention risk (e.g., co-employment type of issues). You also need the system to provide you with other information -- who, when, where (where is the economy going, what direction are we giving to the provider)." But perhaps most important, this CPO argued, is the criticality of understanding what the true cost is. In his words, "Procurestaff provides the tool that enables us to do this. They can provide it in a supplier agnostic manner. We use many firms to provide talent. Procurestaff is the tool. We want resources at the best rate. We don't care who it is. Through this supplier agnostic methodology we are sourcing based on the need, not just on the individual. This can reduce costs by 30%."
Like many other organizations who have implemented a VMS solution, this organization has realized that rates can vary significantly even for similar resources. But by enabling comparisons between resources on as close to an apples-to-apples basis as possible, they have seen a dramatic cost improvement and most important, it has made "business owners comfortable with the process" because "they see the data and know that we are deriving the best value for services we need vs. paying premium" that previously cost them potentially hundreds or thousands of extra dollars per week, per resource.
One of the major advantages of ProcureStaff, this CPO suggested, was their benchmarking capability. For him, "Benchmarking around spend analytics for contingent labor is critical. Because we started with a much broader array of suppliers, we have been able to eliminate or determine what the optimum mix is in each area." ProcureStaff has "been very good at rationalizing down the base to make sure that our suppliers win enough business to give us the best price. We review how much companies are winning and if they're not winning enough, we eliminate them from the program. Benchmarking and program optimization have been very valuable [to us]." And they've been two tools that ProcureStaff has brought to the table that have been essential to their overall success.
Stay tuned for Parts 2 and 3 of this series on ProcureStaff.